A few moments ago President Trump signed HR Bill 7010 into law, which we summarized for you in an alert yesterday. Click here to review that alert. We also need to clarify that all of the revised and amended PPP terms apply to all existing and new PPP loans with the exception of the new five year minimum maturity. Existing loans will require an agreed upon amendment between the borrower and lender to provide for the extended maturity date. All new PPP loans will automatically have the new five year minimum maturity.
Additionally, keep in mind this new law provides you with the option to continue using the eight week covered period or extend the covered period to 24 weeks. If you anticipate a need to reduce your workforce following the use of all the PPP loan proceeds and before 24 weeks, we recommend considering sticking with the eight week covered period at this time. If you select the 24 week period, based on current guidance, a borrower will need to maintain their workforce and comply with the FTE hours/salary requirement for the entire 24 week period or restore their workforce by December 31, 2020 unless a borrower can establish an inability to return to the same level of business activity as the business was operating prior to February 15, 2020 due to compliance with applicable guidance relating to COVID-19 (e.g., social distancing requirements, CDC recommendations, OSHA recommendations, etc.). That is, unless we get clarification/guidance soon, it appears that a borrower (with a loan origination before today) cannot elect a covered period between eight weeks and 24 weeks. It has to be one or the other.
